Welcome to the 2017 National Competitiveness forum. I hope all of you that were with us last night had a lovely evening at the University Club for our annual dinner. I know we were all absolutely blown away by the fantastic talk that was given on sustainability. Thank you again for that wonderful poor divorce of the imperative for sustainability in our future. Allow me to recognize and thank our sponsors for their support and commitment for the council of work and i want to recognize the company and Lockheed Martin are premier sponsors and want to recognize our national for pepsico, deloitte, our chairman sponsor asu, university of california san diego as well as the benefactors and patrons a ten tv and Michigan State university, university of action, verizon, Marquette University and whitecap investment. We cannot do that for him and i thank you very much for that. We have a full day, very exciting talks, as well as the relief of some of the critical annual policy work of the council on competitiveness starting with our clarion call for competitiveness that we will release shortly. I want to frame that in a few overarching facts about the good and the bad of our economy right now. The good news is of course that gdp growth over the past two quarters has been very strong while productivity was slapped for most of the year it has rebounded recently and unemployment is low. In fact its the lowest level since 2000. We know that consumers and investors are optimistic and inflation remains [inaudible]. Forcing action on longterm priorities such as reducing the Corporate Tax rate and implementing a territorial tax system to repatriate the offshore earnings of american corporations. The fed has recently raised its expectation for growth issue under this year and next year on the economy expecting us to be about 2. 5 , not at the levels that tim clifton says we need to be at the. 5 but nonetheless that is great news and of course unemployment is expected to continue to drop and we hope to see some gains in wages. Of course, we know in competitiveness that theres not a single bullet and this is an ecosystem and there is still a myriad set of challenges within the country. As face a continually increasing growing deficit and ensuring the stability of our middleclass families and ensuring that the crown jewel of our Higher Education system does not have an unfortunate impact coming out of this new tax legislation and very importantly we want to work very hard at this Us Investment in our r d particularly our basic research continue to decline. At todays forum we are going to look at the issues of vital to longterm competitiveness and prosperity. You will hear from our board on the overall state of our economy in agenda as we release a clarion call. He will hear from jim clifton to look at the future. Very excited that we will hear from the ceo and chairman of deloitte on the latest report of the Council Partnership with deloitte on exponential technologies and advanced manufacturing. We will have a discussion with the director of National Science foundation and two of our university present on the work coming out of the exploring frontiers and initiative that is laying the groundwork for a new commission on innovation frontier will release later today. We know of course that energy and manufacturing are inextricably linked and we will continue the work of art Rate Committee to look at our economy and bring to the forefront the skills and challenges of educating our workforce as we discussed energy and manufacturing throughout the day. I take all of you will love our selection talk by adam corey about human augmentation and that will be substantive and entertaining and this afternoon we will have a series of mini ted talks that look at some of the disruptive frontiers from big data and the Cyber Attacks and the future of medicine and the coin in black chain and the rise of the robot and what that means for american robe workers. I want to thank you all for participating supporting the council on competitiveness and i want to thank our tremendous leadership our chairman and our vice chair in the global vice chair and michael crow as well as all the members of the executive committee and the staff of the competitiveness. With that i would like to invite the executive committee to come to the stage. Thank you. [applause] loca [applause] welcome everybody. Im larry weber and im going to moderate this panel this morning and welcome to the mall. I understood there was an introduction that i was not in charge of but we will go away from that. I think im the secondlongest member of the council and i have to tell you in the 30 years i have been here the work on competitiveness probably cannot be more important. The challenges we are facing in almost every aspect of our leadership on the global basis is being tried it. We obviously have deborah and sam allen and mike crowe from the Arizona State university and matt from pepsi. I want to start with the first category since when i woke up this morning at the hotel it seems to be on the cover or the front of every newspaper and also in my smart phone. Maybe, sam, ill start with you. Maybe one of the biggest benefactors of the tax reform is the Corporate Tax going down to 21 . I guess the question is one how do you see that as a ceo and chairman is one of our major corporations in the globe and how will that help you and second how do you think it could hurt you know in our competitiveness and anyway and will it create more jobs or more innovation and competitiveness in our country . Well that is the hundred dollar question right now. It is interesting this week that ive been out with our investors all over both coasts and thats one of the first questions everyone asks and we start out by saying the devils are in the details however they end up writing it. Its not from our perspective, our tax rate today is roughly 34 normally what we pay in about 55 of our earnings come from the us and if the rate does go down to 21 our effective tax rate will go to 26 or 27 in total. People have a tendency to lose sight and its not going to go down to 21 because the earnings come from the other part of the world but it certainly will what everyone is writing if it ends up being something similar to that and the analysis weve done first and foremost for our customers and our dealers will be very positive. That is even more important than it is for us, quite frankly, because if they do well will do well as well. There is no doubt it will be [inaudible]. I read all things from economists and people say it will add to gdp 15, 25 points and other say 50 basis points plus and im in the camp that it will add 50 basis points plus two gdp but it will be feathered and over probably just it wont happen the first year because there are some other parts provisions to it that in your first year are negative from a company standpoint, company like ours and immediately if the tax rate goes down you got to go in and your provisions for your tax losses you got to restate those and they were at 37 and now you have to write them back down to 21 so there are some sites into this that will have an impact but in my opinion if this does go through it will be very stimulative and it will be stimulative of our longer period of time and yes, it will help with competitiveness. The stimulus part to the economy is even more important then the competitiveness part that may help a company like ours. Trying to get to the 500 pages but they just delivered it yesterday to everyone. One of the areas that doesnt look so promising, mike, is Higher Education and the way that the tax form seems to be looking at some of the restrictions. Thoughts from you and your colleagues on that . Well at first tax form is positive and needs to be constructive and if you think about the entire productivity of the country but at the same time what happens is many members of congress have become frustrated with universities for lots of Different Reasons so in my view they are eking out punishment that no doubt, the proposed is now off the table and the taxation of tuition benefit and graduate students taxation of concern endowments and the overall status of the viewing the universities is problematic is all a sign of the fact that i think there are two things going on. One there is concern about the responsiveness of the university to the bigger advancement ages of the United States of the self and some are concerned for not doing what we need to be doing. Others that unfortunately are using tax policies to send signals about basically their view of the culture wars that are going on and you take those two things together it is not well thought out text design is related to helping universities to do with the country needs most witches to contribute to the most majestic Human Capital production that the world has ever seen. Like i talked about last night, as well as knowledge capital, investment and production universities need to start rethinking the way they are communicating what they are doing is protecting what were doing getting to the general population about the impact of what the university is all about working toward or for going to have this continuing ongoing argument for tax policy, student loan policy, regulatory policy, structural policy, they will all be shaped by politicians are unhappy. Right now we need that Business Community to also speak out that the universities should be doing in the tax status of the university being largely tax entities has been a critical success variable in them being able to achieve the levels of success weve achieved. All of a sudden the universities become a tax entity thats a completely different kind of thing and we are moving in the direction we need to be careful about that. I couldnt agree more. You know, last year in the council we did a longterm study on productivity and in a moment id like to ask you to look at where we might be headed in the direction of productivity in the United States and because the conflicts seems a longterm decline and where do you think that will end in what are the sort of lovers need to look at to get productivity being in the right direction . As we talked last year and productivity as you say has been declining since 2008, 2007, for several years excuse me, now, there is some encouraging data and that is the last quarter weve seen for the first time an increase in productivity. However, the question is that a blip or can it be sustained . The reality of it is is that overall the trends as you pointed out have been what is probably doing about their productivity . Look, for doing what all other large corporations are doing. Were looking at the most efficient way of the Point Capital and using our labor force and what isnt generally discussed as much as it should be his with productivity and automation and Everything Else that we are doing it is improving the output of her industries were not replacing those drops with new jobs. And so i think more importantly for my mind and not just productivity is what type of jobs have i touched on this last night are we going to create and invest behind and educate people in order to have a workforce that is engaged in the biggest worry over the next decades to come is this mismatch between the jobs we are creating and the skill set of the workforce that is available. That gap is widening. This is the central issue so productivity in certain sectors are accelerating at the fastest rate ever and the actual people who are working, creating, developing and so forth and then there are people being displaced unable to enter the workplace because the nature of their employment skills is insufficient to be engaged in this is a process that is accelerating and creating part of the political response to the universities themselves because he has not adjusted to look at this problem on a different scale. But if i could just build on one point. As an employer people ask me what keeps you up at night . I will tell you. The average age of an american with the training in science and energetic hearing and mathematics working in any industry in this country is now over the age of 50. For the next decade half of the course, the entire country workforce will anticipate retiring. There is nowhere near enough students that fulfill that pipeline that are coming out of institutions like mine that we can fire and so the time. It is taking to fill a position actually if i look back over the last ten years at pepsico is getting longer and longer. Productivity cannot continue if we cannot fill that workforce and so we have not only a mismatch but we have a diminishing pipeline of talent and in particular, feel to take a long time to train people. You cant train a scientist or engineer or mathematician in any of these fields overnight. Somehow this discussion is going on and its got to take in account what are we going to invest behind institutions i dont train scientists or train engineers or mathematicians. The universities do but i picked them up from there and apply their skills. Weve got a mismatch and sometimes we have to fill it. We used to fill it from the outside of the United States but that is trying for lots of reasons. What will we do . Will carry that thread and ill go to you, debra. The council has been about many things but science and Technology Disruption and computing have been topics of interest and impact productivity, education, everything and we are also seeing in my opinion the recapitalization of the economy where youve got five companies basically four and half trillion dollars, apple, google, facebook and wondering where is our leadership right now in science and technology and where does it need to go and we are seeing all these words like artificial intelligence, machine learning, which, by the way, mit had the lab start in 1981 so, you know, maybe you could give a frame about that and the rest of the panel, sam i know you just bought quite a large ai company and how you see that from a competitive business point of view and in general science and Technical Education and productivity and as we move into the next fiveten years. Thank you, larry. The council was formed 30 years ago and the whole issue surround technological leadership was one of the driving forces for the creation of this organization and we have always made the case that our nation has to invest in the forefront of knowledge creation and deploy the technologies of the future in our companies that can be globally. So we have been very concerned and this is effective in the clarion call with this longterm decline in our federal investment in basic research and research and development as a percentage of gdp it continues to decline in other nations are surpassing us, japan, korea, others as a percentage of gdp but we still as a country perform about a third of all Global Research but china is on its track to surpass us on that. The investment matters in the investment matters because through the National Science foundation through the department of energy and through the department of defense are universities and National LabsCompanies Come together in the Strategic Partnership and thats one of our real core advantages for the rest of the world. Others continue to come and want to understand how we can have that ecosystem that moves so quickly. The companies you mentioned that are the top of the s p they were enabled by huge investments since for two in electronics, in the microprocessor, and all the things that enable the facebooks and googles and amazons to create the value of the house. Looking to the future, which of course is what our chief Technology Officer still, we are really working as a council and the country to focus on how these frontiers come together in multidisciplinary ways. I think we were here when we release our report on next potential technology that this is the greatest time in the world with the digital, innotek, cognitive revolutions all coming together and colliding. I think that these will be the drivers of productivity in our standard of living. Back to our earlier conversation we have to invest in people without the people the drive will be the ones who have the core initial research but other countries in the world will capitalize and create the drops and while for their countries. This is a big challenge and a great opportunity for our country. Sam . I guess ive been on the council long enough [laughter] but i put it in a couple different categories. From our standpoint the next fiveten years, the next five years, some of the innovations are phenomenal and whether it be an artificial intelligence, online learning, whatever you want to call it, there will be tremendous productivity improvements. I agree with everyone that the issue we have today and everyone has today is attracting the human talent and it will only get worse. As a company you will find a way to attract the talent and work on whatever you are working on to drive the value for your company. Free market enterprise will allow that to. The one that you dont do is fund the basic research and that is the concerning part from my perspective. Companies will find a way to get the people they need to do what they are doing basic research that creates a platform upon which all of us build our businesses on that is where the funding to again, the investment is, so that the country itself can stay very, very competitive. You know, you only have so much water in a bucket and you got to say how youre going to divide the water between companies and free market price universities and in basic research. I would be putting a lot of that water in the basic Research Category whether it is a university in other areas like the labs because that is the platform that lets all of us then grow up on it. We will find a way to get what we need but we dont develop that platform and that platform will keep Getting Better and better and as t